Why has tax debt increased?

By the end of December 31, 2021, the whole tax sector recovered VND25,100 billion

Tax debt increase

According to the report of General Department of Taxation, by the end of December 31, 2021, the whole tax sector recovered VND25,100 billion, reaching 83.4% of the assigned target.

In particular, collecting debt by debt management measures reached VND17,705 billion; collection by debt enforcement measures VND7,395 billion.

Along with that, the tax sector has also focused on handling tax debts that are no longer able to be paid to the state budget following Resolution No. 94/2019/QH14.

Accordingly, by the end of 2021, the total number of taxpayers who have been processed for debt relief and debt cancellation of late payment interest is 860,448 with the total amount of tax and late payment interest at VND32,941 billion, equal to 117.8% of the assigned task.

Accordingly, handling debt relief for 651,733 taxpayers with a total amount of tax debt is VND27,671 billion (equivalent to 157.8% of the assigned task); handling debt cancellation of late payment debt for 208,715 taxpayers with a total amount of late payment and cancellation of VND5,270 billion, equaling 51.3% of the assigned task.

Most tax departments are submitting to the People's Committees of provinces, the General Department of Taxation and the Ministry of Finance to issue a decision of debt cancellation or are in the process of disclosing information and reviewing debt cancellation records.

Thus, by the end of December 31, 2021, the total tax debt of the tax sector is VND104,042 billion, an increase of 9.3% compared to December 31, 2020. The ratio of total tax debt over total revenue of 2021 is at 10.1%. The total tax debt by the end of 2021 is VND 91,742 billion, the ratio of total tax debt to total revenue in 2021 is at VND91,742 billion. 8.9% excluding the amount of tax arrears that are being handled and the tax debts under complaints and lawsuits.

According to the analysis of the General Department of Taxation, compared with the end of 2020, 36 out of 63 localities have reduced the total amount of tax debt; 27 out of 63 localities have a total increase in tax debt compared to the end of 2019. In particular, 17 out of 21 localities have a high debt growth rate of 10% or more.

Compared with the tax debt target assigned in 2021, 30 out of 63 localities met the target; 33 out of 63 localities did not meet the target, of which 25 out of 33 localities were 10% or more than the assigned target.

The Covid-19 pandemic caused an impact on tax debt

In 2021, the Covid-19 pandemic led to the application of social distancing in many localities under Directive 15/CT-TTg and Directive 16/CT-TTg of the Prime Minister. It caused many difficulties for enterprises in production and business, with many enterprises suffering from losses and insolvency.

Along with that, a number of taxpayers in industries that are eligible for tax payment extension have not submitted a request yet in accordance with Decree 52/2021/ND-CP of the Government, so they are still subject to debt monitoring. Hence, it leads to an increase in total tax debt.

According to the General Department of Taxation, the debts of land use fees, land rents and fees for granting mineral exploitation rights of some projects have not been paid into the state budget.

The problem is that projects have not been put into operation, waiting for localities to carry out ground clearance, settlement of compensation or waiting for approval of the plan to adjust the use purpose or the exploitation area. However, according to the law, the tax authority calculates the debt under the notice of payment of land use levy, land rent, and mineral mining rights.

In addition, there are still a number of taxes and land rents that have expired the tax payment extension following the Government's Decrees and Decisions in order to remove difficulties for people and businesses. Although the tax authority has implemented measures to urge debt collection, taxpayers are still facing difficulties in cash flow, thus tax has not yet been paid into the state budget.

The General Department of Taxation also pointed out that there was a situation where some taxpayers make declarations on arising payable tax amounts who were not directly affected by the Covid-19 pandemic, but they take advantage of the pandemic to delay paying tax.

In 2022, the General Department of Taxation will review, calculate and assign tax collection targets to each tax department. Tax departments will assign debt collection targets to each tax branch, affiliated unit and tax official. Besides that, carrying out monthly and quarterly check and monitoring the implementation progress to ensure that the target of debt collection is completed by the end of the year. At the same time, reviewing and classifying tax debts, analyzing the causes of each debt subject to have solutions to urge collection.

The Tax Department will also continue to closely coordinate with Party committees, local authorities, and relevant ministries such as Police, the State Bank, the investment planning agency, and market surveillance authority in tax debt recovery, especially in handling the recovery of tax arrears related to land and mineral mining rights.

The tax sector aims to implement digitization in the issuance of debt notices, debt assignment and classification, reducting tax debt groups accurately and settlement of tax liabilities appropriate to the nature of each debt, improving the effectiveness and efficiency of debt management and tax debt enforcement.

In particular, the Tax authority will closely coordinate with the State Treasury to collect tax arrears and deduct value-added tax as prescribed by law when the State accelerates payment of public investment capital according to the Prime Minister’s Directive.

Also, focusing on reviewing projects that have expired tax incentives, newly arisen projects, arrears according to the recommendations of the Auditing and Inspectorate agencies in order to collect the correct amounts of taxes, fees, charges, revenues from land, natural resources, minerals and other revenues into the state budget.